Ch 4: SmartBook

After an adjusted trial balance is prepared, what is the next step in completing the work sheet used in preparing financial statements?

Sort adjusted trial balance amounts to the financial statement columns.

Review the following statements and select which is correct regarding a work sheet and formal financial statements.

The Withdrawal's account balance will be used in preparing the statement of owner's equity.

Explain how to add adjustments to a work sheet when more than one adjustment is required: (Check all that apply.)

The adjustment can be added to a blank line. The adjustment can be combined into one adjustment amount. The adjustment can be squeezed in on one line of the trial balance.

Select all that apply Explain how to add adjustments to a work sheet when more than one adjustment is required: (Check all that apply.)

The adjustment can be squeezed in on one line of the trial balance. The adjustment can be combined into one adjustment amount. The adjustment can be added to a blank line.

Given that a company reported net income for the year, determine how a company would complete its work sheet for the period by choosing the correct statement below.

The company would add the net income amount to the Credit column of the Balance Sheet & Owner's Equity columns of a work sheet.

Which of the statements below describe(s) a temporary account? (Check all that apply.)

A temporary account has a balance for only one period. A temporary account is closed at the end of an accounting period.

Select all that apply What is an intangible asset? (Check all that apply.)

- Intangible assets are long-term resources that benefit business operations, but lack physical form. - The value of intangible assets comes from the privileges or rights granted to or held by the owner.

Select all that apply What defines a long-term investment? (Check all that apply.)

- Long-term investments are sometimes referred to as noncurrent investments. - Notes receivable and stock and bond investments are assets that are expected to be held for more than one year.

Select all that apply Define plant assets by selecting the correct statements below. (Check all that apply.)

- Plant assets are property, plant and equipment that are tangible. - Plant assets are used to produce or sell products or services. - Plant assets are equipment and other assets that have a life greater than one year.

How can you add multiple adjustments to one account in a work sheet?

A new line can be added following the Totals line on the trial balance.

Which of the following statements correctly describes what a work sheet is? (Check all that apply.)

A work sheet helps to organize financial data. A work sheet is prepared at the end of an accounting period. A worksheet is a tool used by accountants. A work sheet does not substitute for financial statements.

Which of the following statements is correct regarding a work sheet and the adjustment process?

Adjusting journal entries are prepared from the Adjustments columns of a work sheet.

Describe an unclassified balance sheet.

An unclassified balance sheet is one whose items are broadly grouped into assets, liabilities, and equity.

Before sorting/transferring amounts to the financial statement columns on a worksheet, the Trial Balance, (Income Statement, Adjustments) and Adjusted Trial Balance columns must (balance, clear).

Blank 1: adjustments Blank 2: balance

Summarize the closing process by listing the closing entries in the order in which they would occur at the end of the accounting period. Step 1: Close Income Statement (credit/debit) balance accounts. Step 2: Close Income Statement (credit/debit) balance accounts. Step 3: Close (income summary/withdrawals) . Step 4: Close (income summary/withdrawals) .

Blank 1: credit Blank 2: debit Blank 3: income summary Blank 4: withdrawals

The closing process takes place at the (end/beginning) of an accounting period, after the (adjusted/unadjusted) trial balance is prepared and (after/before) the financial statements are prepared. Listen to the complete question

Blank 1: end Blank 2: adjusted Blank 3: after

Review the following totals from a work sheet. Based on these totals, the company experienced (a) net (income/loss) of $. Income Statement Balance Sheet

Blank 1: loss Blank 2: $2,500, 2500, or $2500

Define equity by completing the following statement. Equity is the (creditor's/litigator's/owner's) claim on the assets of a business. In a proprietorship, this claim is reported in the (asset/equity/liability) section of a balance sheet in the (Capital/Revenue/Cash) account.

Blank 1: owner's Blank 2: equity Blank 3: Capital or capital

A post-closing trial balance is a list of (permanent/temporary) accounts and their balances from the (journal/ledger) (after/before) all (adjusting/closing) entries have been journalized and posted.

Blank 1: permanent Blank 2: ledger Blank 3: after Blank 4: closing

Closing means to transfer account balances from (asset/liability/permanent/temporary) accounts so that they will start with a (contra/larger/zero) balance at the beginning of the next period.

Blank 1: temporary Blank 2: zero

closing means to transfer account balances from (asset/liability/permanent/temporary) accounts so that they will start with a (contra/larger/zero) balance at the beginning of the next period.

Blank 1: temporary Blank 2: zero

Which of the following accounts would be sorted from the Adjusted Trial Balance of a work sheet to the Balance Sheet & Statement of Owner's Equity columns on a work sheet?

Cash; Accounts payable; Owner, Withdrawals

Describe your understanding of the closing process by identifying the correct steps below. (Check all that apply.)

Close all expense accounts. Close the Withdrawals account. Close all revenue accounts. Close the Income Summary account.

Summarize the steps in the closing process by selecting the correct choice below.

Close income statement credit balance accounts; close income statement debit balance accounts; close income summary; close withdrawals.

Choose the statement below that explains what "closing" means. Multiple choice question.

Closing means to bring an account balance to zero.

Choose the formula below that is used to calculate the current ratio of a business.

Current assets divided by current liabilities

Define "current" as it applies to assets and liabilities on a classified balance sheet.

Current items are those expected to come due within one year or the company's operating cycle, whichever is longer.

Select all that apply What are current liabilities? (Check all that apply.)

Current liabilities are usually settled by paying out current assets such as cash. Current liabilities are liabilities due to be paid within one year. Current liabilities are reported in the order of those to be settled first.

Which of the following is correct regarding a work sheet?

Each set of column totals must balance on the Trial Balance columns, Adjustments columns and the Adjusted Trial Balance columns.

Which of the following statements is (are) correct about completing a work sheet? (Check all that apply.)

If a net income occurs, it is added to the Credit column of the Balance Sheet. If a net income occurs, it is added to the Debit column of the Income Statement. If a loss occurs, it is added to the Debit column of the Balance Sheet. Adding net income to the Credit column of the Balance Sheet & Owner's Equity columns implies that it is to be added to Owner, Capital.

Identify the accounts below that would be classified as a long-term investment. (Check all that apply.)

Investments in bonds Notes receivable due in 2 years Land held for future expansion

What is a work sheet?

It can help with adjusting and closing accounts and with preparing financial statements.

Select the statement below that describes a post-closing trial balance.

It is a listing of all permanent accounts and their balances after closing.

Which of the following lists contains only temporary accounts?

Wages Expense; Income Summary; Owner, Withdrawals

Select all that apply Review the following statements and select the ones that are correct regarding sorting accounts from the Adjusted Trial Balance columns of a work sheet to the Income Statement and Balance Sheet columns in order to prepare for our last step of completing the worksheet. (Check all that apply.)

Liabilities go to the Balance Sheet & Statement of Owner's Equity Credit column. Expense accounts go to the Income Statement Debit column. Owner, Withdrawals go to the Balance Sheet & Statement of Owner's Equity Debit column.

Select all that apply A classified balance sheet has several categories for assets and liabilities including: (Check all that apply.)

Long-term investments. Noncurrent (long-term) liabilities. Plant assets. Current assets.

Which of the following defines long-term liabilities?

Long-term liabilities are debts of a business that are not due to be settled within one year.

Select all that apply Identify which of the accounts below would be classified as a plant asset account. (Check all that apply.)

Machinery Building Land currently being used Equipment

Select all that apply Identify the accounts below that would be classified as long-term liabilities on a classified balance sheet. (Check all that apply.)

Mortgage payable Bonds payable (due in five years)

Select all that apply Identify which of the accounts below would be classified as a current asset. (Check all that apply.)

Office supplies Cash Accounts receivable Prepaid rent

Select the statements below that describe the purpose of a post-closing trial balance. (Check all that apply.)

One purpose is to verify that all temporary accounts have zero balances. One purpose is to verify that total debits equal total credit for permanent accounts.

Select all that apply Select the statements below that describe the purpose of a post-closing trial balance. (Check all that apply.)

One purpose is to verify that total debits equal total credit for permanent accounts. One purpose is to verify that all temporary accounts have zero balances.

Which of the accounts below would appear in the equity section of a classified balance sheet?

Owner, Capital

review the following statements and select the ones that are correct regarding sorting accounts from the Adjusted Trial Balance columns of a work sheet to the Income Statement and Balance Sheet columns in order to prepare for our last step of completing the worksheet. (Check all that apply.)

Owner, Withdrawals go to the Balance Sheet & Statement of Owner's Equity Debit column. Expense accounts go to the Income Statement Debit column. Liabilities go to the Balance Sheet & Statement of Owner's Equity Credit column.

Select all that apply Identify the accounts below that would be classified as intangible assets on a classified balance sheet. (Check all that apply.)

Patent Franchise Goodwill Copyrights Trademark

Identify which of the following steps in the accounting cycle is optional.

Reversing journal entries

Which of the following statements correctly summarizes how to compute net loss or net income using a work sheet?

The difference between the totals of the debit and credit columns of the Income Statement columns is net income or net loss.

Which of the following lists steps of the accounting cycle in the correct order (note that not all steps are listed)?

Trial balance, Adjusting journal entries, Post-closing trial balance.

Select all that apply Recall the column headings of a work sheet used to prepare financial statements. Which of the following items would be seen on such a worksheet. (Check all that apply.)

Unadjusted Trial Balance columns Income Statement columns Adjustment columns Balance Sheet columns Adjusted Trial Balance columns

Select all that apply Identify the accounts below that would be classified as current liabilities on a classified balance sheet. (Check all that apply.)

Unearned rent Taxes payable Notes payable (due in three months) Accounts payable

.Which of the following lists contains only temporary accounts?

Wages Expense; Income Summary; Owner, Withdrawals

When does the closing process take place?

at the end of an accounting period

Current assets are:

cash and other resources that are expected to be sold, collected or used within one year

Select all that apply A classified balance sheet can be described as a balance sheet that: (Check all that apply.)

lists current assets in the order of how quickly they can be converted to cash. is more useful to decision makers. organizes assets and liabilities into important subgroups

Current items can be described as those expected to come due within one (month/year) and are listed in the order of how (quickly/slowly) they could be converted to or paid in cash.

year quickly